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I think login access is needed, but another MSM source turning to the "darkside," pretty bearish on housing. I think we have another "convert" to the "team":
New York Times:
What Statistics on Home Sales Aren’t Saying
By DAVID LEONHARDT
Published: December 6, 2006
Excerpts:
**************
The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.
In reality, homes across much of Florida, California and the Northeast are worth a lot less than they were a year ago. The auction in Naples may have exaggerated the downturn in the market there, but not by much. Tom Doyle, a Naples real estate agent, estimated that a typical house there, sold in the normal way, would go for about 20 percent less than it did the previous fall.
In the Boston area, prices have fallen about 10 to 15 percent since the middle of 2005, estimated Chobee Hoy, who owns a real estate brokerage firm in Brookline. Jerome J. Manning, who runs the Massachusetts-based auction company that conducted the Naples sale, told me he thought that values had dropped about 20 percent around Boston. (The government, meanwhile, says the average price rose 1 percent from last summer to this summer. But here’s all you need to know about how well the government tracks the Boston market: the index excludes any mortgage larger than $417,000.)
(snip)
For many homeowners, of course, the decline doesn’t much matter. They didn’t really benefit from the run-up, and they won’t suffer from the decline. And for any renters hoping to buy a home, the fall in prices is downright good news.
Unfortunately, there are also a lot of families that took on huge mortgage debts based on the ephemeral peak values of their properties. In effect, they cashed in on the housing boom without cashing out. As Ed Smith Jr., the chief executive of Plaza Financial Group, a mortgage brokerage firm near San Diego, said, “So many people picked up their homes, turned them upside down and shook them like a piggy bank.â€
The withdrawals have been so big that the average household in Boston now has slightly less equity in its home than it did in 2000, according to an analysis by Moody’s Economy.com that took inflation into account. And that analysis used the house prices reported by the National Association of Realtors, which appear to be more accurate than the government’s data right now but are still too rosy.
Then there are the people who bought their homes in the last couple of years and made almost no down payment. Many of them may now be underwater, owing more on their mortgages than their houses are worth.
Most worrisome, growing numbers of these families are falling behind on their mortgage payments, and they won’t be able to bail themselves out by refinancing or selling their homes. “We’re now going to combine a high amount of debt with falling home values,†said Mark Zandi, chief economist of Economy.com.
For the broader economy, this may turn out to be just a hiccup. Big piles of debt can often look scarier than they really are. Then again, the housing slump of 2006 may also be the start of something larger. Mr. Zandi considers it to be “the most significant threat to the global expansion.â€
Over the last few decades, the world’s financial system has endured a crisis roughly once every three or four years. There was the stock market crash of 1987, the Asian and Mexican meltdowns in the 1990s, the dot-com implosion of 2000 and, most recently, the aftermath of Sept. 11, 2001. We may now be living on both borrowed money and borrowed time.
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March 15, 2007
Experts Miffed as Housing Continues to Plunge
San Francisco -- William Wilbur C.R. "Dick" stands in the entry of a prime piece of San Francisco real estate. Dick, a realtor in San Francisco's posh Marina neighborhood, wonders where all the buyers have gone. "Luxury condos like this have been selling here for as long as they've been building them. I don't know where all the buyers are hiding, but the real buying season doesn't start for a couple of months, after kids get out of school."
Dick, like many other realtors in sky-high areas like San Francisco, have already endured nearly a year of anemic sales, stubborn sellers, and the largest culling of their profession on record. "Prices always go up here, that's historical fact. We were up about 5-6% last year, in fact", reassures Dick.
But the fear is palpable. In fact, buyers have not returned, and prices are down nationally. San Francisco has seen modest home price drops, compared to some other areas, posting a respectable 8% drop in 2006. Southern Florida has not been so lucky. Plagued by rampant overbuilding, speculative fervor, and an anemic local economy, Southern Florida communities have seen over 20% price drops, with no sign of relief in 2007.
In fact, many areas in which home builders targeted for massive new construction activity are now seeing double-digit price drops, mostly attributable to a nearly 2 year backlog of unsold new homes. "Home builders are much more willing than individual home owners to drop prices. I think we've seen capitulation among home builders; they've exhausted all other incentive options, and now they're left with price." Mr. Iwasright is one of the short list of economists who predicted that the US housing slowdown would be far worse than either markets or the media expected. "I've appeared on television numerous times, but only recently have people begun to listen. I'm afraid it's probably too late now."
Back in San Francisco, Dick loads some boxes into the trunk of his standard issue Lexus. "Sellers are starting to price to sell. I'm seeing a few listings reduce prices by a couple thousand dollars, but those are usually in less desirable parts of the city. But this area is unique; here, we're protected from the kind of drops they're seeing in Las Vegas and San Diego. Here, it always goes up. In fact, look at this condo, which went almost a quarter million over asking just a couple months ago!" As Dick drives off down the street, he passes through a virtual sea of "For Sale" signs."
Randy H appears every fortnight in this publication.
**Disclaimer: What appears here are fictional works; any similarities to names or places are coincidence. Any offense taken by those who would be offended is well deserved.
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